Entrepreneur Ed Reeves tells Rachel Bridge at Drax about how he managed to turn fury and frustration into a multi-million pound tech-enabled business backed by ECI
Ed Reeves’s original career plan was to be a professional windsurfer. After getting a degree in sports science and business studies from Manchester Polytechnic, he headed to Australia to take part in competitions.
However he failed to make sufficient returns out of his sponsorship and a year later returned to the UK. “It was an impossible dream. I failed dismally,” he says.
Ed then opened a windsurfing shop at Bala Lake, in the Snowdonia National Park, but after two years and three more retail outlets, struggled to make enough profit to grow the business at the rate he aspired to. He says: “There are only so many days you can sit in the freezing snow on the side of a Welsh lake in the middle of winter and say, I hope a customer walks through the door.”
After working in marketing for a couple of years Ed started a business supplying councils with the livery for their vans. It was a profitable business and although it was too niche to be able to scale significantly, it did however inspire his next move.
While Ed was away on holiday, he hired an answering service to take his business calls. When a council rang to say it could not fax through an order because his machine had run out of paper, the woman who took the call told the customer she was unable to help because she was simply the answering service.
Ed asked his sister to go round to his flat to put more paper in the fax machine, but the damage had been done and he lost the council contract.
He was furious. He says: “I thought it was mad that the people at the answering service just followed a script. There had to be a way that a person could truly represent my business and be accountable for the outcome of a call.”
So in 2000 he, along with his sister Rachel Clacher, set up an answering service with a difference, where the people taking the calls would not have scripts to follow. Instead, they would be assigned to particular clients and would get to know them as well as if they worked in their offices.
“Everyone thought it wouldn’t work,” he said. “We talked to business advisers and the banks and everyone said no.” Undaunted, he borrowed £5,000 from an aunt and used £10,000 from overdrafts and credit cards. Moneypenny began from there.
Progress was initially slow and in the first year turnover was £50,000. But word spread and businesses began to get in touch. They continued to get in touch, and Moneypenny now has a turnover of £33 million and 700 employees. Part of the secret, says Ed, has been Moneypenny’s willingness to embrace technology to continually improve the service it offers.
He says: “Moneypenny’s difference has always been that we have a wonderful backbone of technology which we have used to create operational efficiencies both on our part and for our clients. We have viewed AI as an opportunity rather than a threat and have always invested heavily in tech development.”
Earlier this year Ed brought in ECI as a private equity investor, partly to enable his sister Rachel to step away from the business and partly to provide Ed with a partner who could help drive expansion in the US. He has stayed on as a Director on the board.
The sales process itself was a fascinating insight into the competitive nature of the PE market right now. In the run up to the deal, Ed spoke to around 50 private equity houses, which resulted in 10 firm offers. He then chose five of these to take through to the final selection process.
He offers two pieces of advice to other entrepreneurs choosing a PE investor. First, get professional help: “I think what will shock most people is the amount of work required to deal with all the due diligence and enquiries in the run up to an investment. It is taxing. We employed an M&A specialist to manage this and it was probably the best decision I made.”
Second, when meeting prospective investors, listen carefully to what they say about your business. He says: “You will be amazed how much you learn about your business and what gets people excited about it, from your conversations with them and the questions they ask. You can then address the issues they raise at your own pace.”
Drax sector lead: Sebastian Powell
Associate Director, Business Services
Tel : 020 3949 9567